Chapter 17: Minimum Price Changes

Exchanges establish the minimum amount that the price can fluctuate upward or down-ward. This is known as the "tick." For example, each tick for grain is ¼¢ per bushel. On a 5,000 bushel futures contract, that’s $12.50. On a gold futures contract, the tick is 10¢ per ounce, which on a 100 ounce contract is $10. You’ll want to familiarize yourself with the minimum price fluctuation—the tick size—for whatever futures contracts you plan to trade. You’ll need to know how a price change of any given amount will affect the value of the contract.